How To Examine A Lease Contract

Business people often opt to lease rather than purchase business premises. It allows them to move or wind up their business without much struggle. The excerpt below discusses how you should examine a commercial lease.

Lease Period and Renewal

The landlord will determine how long they wish to lease the building. However, you may opt to negotiate the lease period depending on the type of business you intend to operate. For example, a commercial bank may want a longer lease compared to an electronics shop. An automatic renewal gives you priority over other interested parties. In contrast, optional renewal enables the landlord to decide who will occupy the building once the lease period is over.


Most landlords will ask for a deposit as well as monthly or annual payments. The deposit may or may not be refundable. Typically, the landlord will use the money to conduct renovations and return the property to its original state once you exit the property. They will refund the remaining amount. The landlord may also ask for goodwill to cater for the costs of acquiring customer relationships or the brand name.

Other factors that would influence payments include the maintenance of common areas, insurance and taxes. The lease agreement should have a cap on what renovations the landlord should conduct. For instance, if you run a delivery business, you should not have to bear the costs of adding more parking space. 

Inquire when and how you should pay your rent. Besides, ask if you will incur penalties for late repayments. 

Renovations and Improvements

Another concern would be whether the landlord allows you to customise the space to suit your needs. For instance, if you intend to invest in a co-working space, you would need to partition the area and install kitchens and bathrooms. You may also have to repaint the space to suit your brand colours.

Use of Common Areas

You need to inquire about the use of common areas. For instance, how many parking slots are you allocated? Inquire about the use of washrooms and other amenities such as kitchens, restrooms, swimming pools and parks.


Check the terms of contract termination. For example, the landlord should give a few months' notice before asking you to move out. In other cases, you may incur penalties for early contract termination. 

When signing a commercial lease, examine the lease period, lease renewal terms, payments, renovations, improvements, the use of common areas and the termination of the contract.

For more information, contact a property conveyancing service.